In the financial market it is known to have anonymous trading systems for trading in financial instruments. The term “financial instrument” is in the present application used in a broad sense and encompasses any tradable item (stocks, bonds, securities, cash, foreign exchange, options, gas, electricity, etc.) or group of items that is traded through matching of counterparty orders (bid, offer). An order normally includes a price and a volume of the item(s) or combination of items. The price and the volume can be viewed as order preconditions that has to be met in order for a match (deal) to take place.
Although one main purpose of an anonymous trading system is to establish a fair and equal marketplace where no user or party knows the origin of any specific order (bid or offer) on the system, there is sometimes a problem for parties who do not wish to trade with specific counterparties. The most common reason for not trusting other parties is creditability, but there may be other reasons as well.
In U.S. Pat. No. 5,136,501 an anonymous trading system is disclosed where the users may enter credit requirements for counterparties via trader terminals. As long as the credit limit is not exceeded, trading can go on as usual. If the credit is exceeded, matchable orders from those parties will not be matched by the system until the credit once again is below the credit limit.
All orders thus retain their anonymity, while the parties can ascertain that no deals (trades) will be made outside a specified credit limit, thus reducing risks.
The anonymous trading system also broadcasts information to the trader terminals. Such information essentially relates to a selected order depth from all present orders in the trading system. Trader terminals may be modified to further limit the order depth displayed to the user. No information regarding entered counterparty credit limits is broadcast. Any orders that normally would result in a match, but where such match is not allowed due to credit limit being exceeded, are rejected by the trading system. Thus, no crossing orders may exist in the order book (i.e. bids that are better than the best offer and vice versa may not coexist in the order book).
In US Patent Application 2003/0083973 an anonymous trading system having credit limit is also disclosed. The trading system can, when the credit is insufficient for fulfilling a complete order, send a message to the parties where the parties are identified and asked whether they wish to proceed with making the deal (partially or in full) or not. This can be viewed as a right to refuse a trade and will in this application be referred to as trade refusal.
Although the above systems provide some possibilities for a user to reduce financial risks there is a need of an even more versatile and easy-to-use system that allows the users of an anonymous trading system to reduce their risks but also to define their acceptable market in an individual manner.